Oil Theft a Federal Offense

In an article recently published by the Houston Chronicle, we learned that prosecutors have made oil theft a federal offense. The event occurred at the Itero Energy Monahans Facility in Monahans, Texas. A 34 year old man named David Wayne Shroeder was part of an oil theft case by stealing truckloads of oil from a West Texas based facility. Apparently the theft was motivated by drug addiction and made feasible by Mr. Schroeder’s knowledge and ability to handle petroleum industry gear.

Schroeder was caught red-handed in the middle of the night at an energy facility in the outlands of West Texas by a local deputy sheriff. Schroeder attempted a quick getaway, was shot by the officer, but still managed to escape. However, hours later he was seen at a 7-11 and arrested.

Prosecutors secured a 21 month prison sentence for Shroeder after he pleaded guilty to the federal offense of interstate shipment of stolen goods. Local law enforcement hope this case will become a tale of caution against what some people are calling the ‘modern equivalent of cattle rustling in Texas.’

The Numbers Behind Oilfield Theft

Officials within the oil and gas industry estimate that there’s nearly $1 billion of annual losses. While equipment makes up a large portion of this, actual oil theft itself is often the greatest temptation for many thieves. Run tickets are often used as fake receipts to sell stolen oil to legitimate buyers who are completely unaware of the origin of the oil. There is also a sizable black market for stolen oil, but oilfield thieves usually have to sell it at a discount.

Back in 2008 the FBI formed a special task force with local sheriffs in the Permian Basin to combat oil theft. This was right around the time of increasing oil prices. As the price of oil began to peak a few years later, so did the instances of oilfield theft in Texas and other oilfields around the country. This year, as oil prices have began to decline, oil field theft has followed stride. That being said industry and law enforcement officials continue to be persistent at finding better ways to prosecute oilfield thieves. These often desolate regions continue to be targets for ambitious criminals and there is significant money to be lost for businesses in this industry. Even more importantly is that without adequate oilfield security, the US energy infrastructure could be at risk. This poses a strong concern for our national security, and could open the door for terrorist activity as the energy industry has become vital to our economy.

Takeaway from the Schroeder Case

From phony paperwork, to receipts for his legitimate transport company that he setup for stolen oil, the evidence was strong and led to a full confession on Schroeder’s part. Prosecutors were able to elevate this case to federal court jurisdiction using a vaguely worded section of the penal code that discusses shipped goods that count as interstate commerce. Specifically, “at all points between the point of origin and the final destination” was the phrase. The prosecutor in Schroeder’s case determined that the moment oil comes out of the ground it’s heading in the direction of a pipeline which could be considered interstate shipment, meaning federal jurisdiction. As a result a federal prison will probably be the location where Schroeder serves out his sentence.